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2020 was, for most of the world, a rather average year.

We really don’t need to revisit why.

You can exclude Bobby Kotick (above) from those tales of woe, however, because the CEO of gaming company Activision Blizzard fared very well for himself.

Last year, Kotick earned just a tick under $155 million (around R2,2 billion), whilst Activision’s median employee earned $99 100 (around R1,4 million).

Activision did enjoy a stellar 2020, with the market value climbing 57% to almost $72 billion, and the company says Kotick’s earnings are “pay for performance”.

As the Financial Times reports, many investors disagreed:

On Monday, the company mustered just 54 per cent approval for its “say-on-pay” motion, even after keeping polls open for an extra week to twist more arms. As most such votes sail through, this is a rebuke worth heeding.

If you can plough through the 73 pages of Activision’s proxy statement devoted to explaining its executive compensation, you will see how we came to this point: Kotick’s 2016 contract included a chunk of stock tied to the ambitious target of more than doubling the company’s equity valuation. With a little help from Covid-19, he did just that, unlocking rewards worth 1,560 times his median employee’s 2020 pay.

It’s not exactly breaking news that the CEO to staff pay gap is rapidly growing, and investors are starting to push back.

Shareholders at companies like General Electric, Starbucks, and Walgreens Boots Alliance have voted against their CEO compensation, and Kotick’s payday only squeaked through by a narrow margin.

One change that has been put forward is increasing employee share ownership:

Activision grants stock even to quite junior staff, but had it decided that Kotick could get by on $55m last year, the spare $100m could have given each of its 10,000 people another $10,000.

That would have given the median employee a motivating 10 per cent raise…

Any chief executive proposing a $155m acquisition could expect their board to ask whether that cash or paper might be better spent another way. But when it comes to investing in their CEOs, directors seem less interested in debating whether the capital could be more fruitfully spent on employees further from the boardroom.

I wouldn’t hold my breath on this front.

Investors can try and exert pressure, but the pay gap has only widened considerably in recent times.

[source:fintimes]